What's Hot

    BNB rate plummets amid SEC lawsuit against Binance

    05.06.2023

    Ethereum co-founder transferred $41 million to the Kraken exchange

    05.06.2023

    Open interest in Bitcoin skyrocketed

    05.06.2023
    Facebook Twitter Instagram
    Monday, June 5
    Facebook Twitter Instagram
    Crypto News
    • Home
    • Bitcoin
    • Ethereum
      • Altcoins
      • ICO
    • Analytics
    • Blockchain
    • Other
      • DeFi
      • Mining
      • Regulators
      • Security
    Crypto News
    Home»Bitcoin»DeFi governance tokens are rarely used for their intended purpose
    aaaecbfa5afbf2636dc5e465361c2690ac90f096
    Bitcoin

    DeFi governance tokens are rarely used for their intended purpose

    AdministratorBy Administrator16.11.2021No Comments2 Mins Read
    Share
    Facebook Twitter LinkedIn Pinterest Email


    bt-crow.com Crypto-News

    16 November 2021 13:56, UTC

    Reading time: ~ 2 m


    Economist Alex Kruger came to the conclusion that tokens accrued under liquidity mining programs are often used inefficiently – most DeFi investors are eager to get rid of them as soon as possible.

    Fascinating research. In Q3 Compound has paid $76m in as liquidity incentives and only $100k in grants.

    Of top 100 accounts, only 7 have held the tokens and only one has ever voted on a proposal.

    1/ https://t.co/HahWlxOK4N

    — banteg (@bantg) November 15, 2021

    The researcher analyzed on-chain data for the 100 largest holders of the COMPound project’s native management token COMP. According to his observations, these addresses received 809 thousand project coins with a total value of more than $ 270 million (69% of the token market supply).

    “However, very few of them are COMP hodlers. Only 19% kept more than 1% of COMP coins; only 7% left more than 50% of what was received. Are mining reward holders still economically interested in the Compound protocol? No, ”Kruger emphasized.

    Krueger is convinced that even fewer native token holders vote on protocol governance issues:

    “It is logical to assume that if so few addresses are hodlets, then even fewer people vote.”

    The author proposed the concept of “governance-mining”, which implies rewarding those who invest time and effort in the development of the protocol.

    The author sees solution in «governance mining», basically rewarding people who put time and effort into evolving the protocol.

    That’s similar to how things work at @iearnfinance. You can still farm YFI, but only by putting in meaningful work, not with liquidity.

    2/

    — banteg (@bantg) November 15, 2021

    Implementation can also mitigate the problem. vesting.

    2. Create a vesting schedule for accrued tokens.

    To better align incentives, there could be a vesting schedule for when the underlying COMP tokens become redeemable.

    The rewards with vesting could themselves be tokens and retain (non-transferrable) governance rights.

    – DeFiCorgi.eth (@alex_kroeger) November 15, 2021

    In his opinion, Compound’s liquidity mining program did not pay off – users never became “protocol managers.”

    “Regardless of what you think the objectives of liquidity mining should be, the scale of these programs should be carefully assessed, weighing the costs and benefits,” concluded Krueger.

    ForkLog previously reported multi-million dollar Compound losses due to protocol update error.




    #DeFi #governance #tokens #rarely #intended #purpose

    DeFi governance intended purpose rarely tokens
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Avatar of Administrator
    Administrator

    Related Posts

    Open interest in Bitcoin skyrocketed

    05.06.2023

    dYdX Community Backs $6.6M Proposal for SubDAO V2 Launch

    05.06.2023

    The Ordinals released an update due to the “cursed” inscriptions

    05.06.2023

    Bitcoin could fall below $25,000

    05.06.2023
    Add A Comment

    Leave A Reply Cancel Reply

    Recent Posts
    • BNB rate plummets amid SEC lawsuit against Binance
    • Ethereum co-founder transferred $41 million to the Kraken exchange
    • Open interest in Bitcoin skyrocketed
    • Riot Platforms sold 600 BTC out of 676 BTC mined in May
    • The rate of the VELO token fell on the eve of the update
    Recent Comments
    • 수원출장 on A professor from a US university restored the Tornado Cash code to GitHub
    • 123 on Taproot support added to LND Lightning client
    • houston junk car buyer on 16,000% increase in social media mentions in 2021 Shiba inu
    • Jim Carrey Memy on Bitwise Launches NFT Tracking Index Fund
    • hotshot bald cop on Kava developers launch testnet with EVM support
    Archives
    • June 2023
    • May 2023
    • April 2023
    • March 2023
    • February 2023
    • January 2023
    • December 2022
    • November 2022
    • October 2022
    • September 2022
    • August 2022
    • July 2022
    • June 2022
    • May 2022
    • April 2022
    • March 2022
    • February 2022
    • January 2022
    • December 2021
    • November 2021
    • October 2021
    • September 2021
    • August 2021
    • July 2021
    • June 2021
    • May 2021
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    Categories
    • Altcoins
    • Analytics
    • Bitcoin
    • Blockchain
    • Ethereum
    • ICO
    • Mining
    • Other
    • Regulators
    • Security
    Meta
    • Log in
    • Entries feed
    • Comments feed
    • WordPress.org
    Top Posts

    Subscribe to Updates

    Get the latest sports news from SportsSite about soccer, football and tennis.

    Advertisement
    Demo
    Facebook Twitter Instagram Telegram
    • Home
    • Bitcoin
    • Ethereum
    • ICO
    © 2023 Bt-Crow.com - CryptoNews

    Type above and press Enter to search. Press Esc to cancel.